ASC Conference
Jeju, Korea, May 2005
First Draft
ROADMAP TO THE ASIA PACIFIC
ECONOMIC COMMUNITY
Hadi Soesastro
APEC Study Group, CSIS, Indonesia
Introduction
The vision of an Asia Pacific economic community, i.e. a community of Asia Pacific
economies, was first articulated formally at the first APEC Leaders meeting in Blake
Island near Seattle in 1993.
In their Declaration, the APEC leaders stated the following:
Recognizing our economic interdependence as well as our economic diversity, we
envision a community of Asia Pacific economic in which:
The spirit of openness and partnership deepens, enabling us to find cooperative
solutions to the challenges of our rapidly changing regional and global economy;
We are a vast Asia Pacific market of two billion people where dynamic economic growth
continues, contributing to an expanding world economy and supporting an open
international trading system;
We continue to reduce trade and investment barriers so that our trade expands within the
region and with the world and goods, services, capital and investment flow freely among
our economies;
Our people share the benefits of economic growth through higher incomes, high skills
and high paying jobs and increased mobility;
Improved education and training produce rising literacy rates, provide the skills for
maintaining economic growth and encourage the sharing of ideas that contribute to the
arts and sciences;
Advances in telecommunications and transportation shrink time and distance barriers in
our region and link our economies so that goods and people move quickly and efficiently;
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Our environment is improved as we protect the quality of our air, water and green spaces
and manage our energy sources and renewable resources to ensure sustainable growth
and provide a more secure future for our people.
The APEC approach thus far is not to define a “roadmap” to realizing this vision. This
follows from the nature of the APEC process, which is driven by subsequent APEC
governments that chair APEC. An APEC government can built on previous initiatives in
developing its chairmanship agenda, but it can opt for going into a totally new direction,
of course with the endorsement of other APEC members. It is the host government of the
annual APEC (leaders and ministers) meetings that largely determines APEC’s footprint.
This is particularly so since the institution of the APEC Summit. The agreements and
commitments made in subsequent summits can be seen as milestones of an uncharted
APEC roadmap.
To qualify the above statement, some APEC members can have an overbearing influence
on the APEC process even though they are in the chairmanship’s role. This has been the
case with the US after September 11. The US has introduced in APEC an agenda of
fighting international terrorism that often has overshadowed APEC’s other agenda. Some
see this as diversion from APEC’s efforts to realizing its vision, but others consider
cooperation in the field of combating international terrorism as an integral part of
regional community building. These activities are now encapsulated under APEC’s
agenda to enhance human security.
A Review of APEC’s Initiatives
Following the first meeting at Blake Island (USA), APEC leaders met the next year in
Bogor (Indonesia). There they made a bold decision by pledging to achieve “free and
open trade and investment in the Asia Pacific region” by 2010 for developed members
and 2020 for developing members. This is known as the Bogor Goals. In addition,
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leaders endorsed the twelve Non-binding Investment Principles (NBIP) to facilitate
investment flows within the region.
At the following meeting in Osaka (Japan) in 1995, APEC governments decided to
translate the Blake Island vision and the Bogor goals into reality by endorsing the Osaka
Action Agenda (OAA). The OAA provides a blueprint for implementing the leaders’
commitment to free and open trade and investment, business facilitation, and economic
and technical cooperation. The OAA has since defined the two pillars of the APEC
process, namely TILF (trade and investment liberalization and facilitation) and
ECOTECH (economic and technical cooperation). The TILF agenda is pursued through
IAPs (individual action plans), particularly in regard to liberalization measures, and
CAPs (collective action plans). The Summit at Subic (Philippines) produced the Manila
Action Plan for APEC (MAPA) which provided a framework to integrate IAPs and CAPs
that were implemented from 1 January 1997 onwards.
The APEC Leaders meeting in 1997 in Vancouver (Canada) focused on ECOTECH
issues. It took up the FEEEP (food, environment, energy, economic development and
population) program that was proposed in the previous year, but no specific initiatives
were introduced. Instead, leaders endorsed the Vancouver Framework for Enhanced
Public-Private Cooperation on Infrastructure. Under the TILF agenda, governments
agreed to start the ill-fated EVSL (Early Voluntary Sectoral Liberalization) Initiative
towards tariff reduction in 15 specific sectors. In addition, leaders also endorsed the
Blueprint for Customs Modernization, which was aimed at streamlining customs
procedures by 2001.
In the following year, at the meeting in Kuala Lumpur (Malaysia), the focus was on
cooperation in human resources development, which was an important element of the
Blake Island vision. The leaders adopted the Kuala Lumpur Action Program on Skills
Development. This program was to contribute towards sustainable growth and equitable
development and was of particular interest to the developing members of APEC. No new
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initiatives were taken in the TILF agenda. Some observers were quick to point out that
APEC has been derailed from its original track.
Perhaps in response to those concerns, the APEC Leaders meeting in 1999 in Auckland
(New Zealand) reaffirmed their commitment to achieve the Bogor goals. They also
reaffirmed the importance of promoting open, transparent and well-governed markets,
specifically by endorsing the APEC Principles to Enhance Competition Policy and
Regulatory Reform. New Zealand was proud to have produced a Framework for the
Integration of Women into APEC.
In Brunei Darussalam in the following year, a major decision by the leaders was to bridge
the Digital Divide by pledging to double the number of people with access to the Internet
by 2010. In Shanghai (China) in 2001, the leaders produced the Shanghai Accord to
revitalize trade and investment liberalization. However, the meeting was dominated by
concerns over global terrorism and APEC’s response to it. When Mexico hosted APEC in
Los Cabos in 2002, it proposed to give serious attention to the consolidation of the APEC
process as concerns became more widespread that APEC has lost steam. In addition, it
proposed to complement APEC’s economic and trade liberalization goals with social and
development targets as a way to promote shared prosperity in the region. In particular, it
pointed to the need to strengthen SMEs.
The meeting in 2003 in Bangkok (Thailand) again reaffirmed the commitment to promote
trade and investment liberalization. In addition, the Declaration stipulated measures to
enhance human security as well as to using APEC to help people and society benefit from
globalization. It appears that at the Bangkok meeting a kind of consensus has emerged
that APEC’s “new” agenda will consist of three broad agendas: TILF, enhancing human
security, and social development. This was modified in the following meeting in Santiago
(Chile) when leaders reaffirmed their commitment to achieve sustainable and equitable
growth and reduce economic disparities for the well-being of the people by meeting the
Bogor Goals of trade and investment liberalization and facilitation, enhancing human
security, and promoting good governance and a knowledge-based society. The leaders
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adopted the Santiago Initiative for Expanded Trade, which gave particular attention to
capacity building, and the Santiago Commitments to Fight Corruption and Ensuring
Transparency.
The above brief review shows that over the years APEC governments have taken
numerous initiatives to promote cooperation and to achieve the APEC vision of an Asia
Pacific economic community. They could be seen as milestones of the APEC roadmap.
Yet, many of those initiatives appear to have met with a dead end or faced with great
obstacles.
If an opinion survey were to be conducted in the region it can be speculated that most
people would not be able to mention any of the above initiatives that APEC has taken
over the year. A few amongst the elite would have heard about the Bogor Goals, but they
would not be able to say precisely what they are. And yet, the Bogor Goals are perhaps
the most concrete target that has been set for APEC, albeit it is only one of several means
to achieving the APEC vision.
The Issues
As suggested before, the APEC agenda today can be seen as having the following
components: TILF and ECOTECH that have been introduced since 1995, and a third
component, namely EHS (enhancing human security), which has emerged since 2001.
These three components are regarded as important to achieving the APEC vision.
However, there does not seem to be a clearly defined roadmap for each of these
components. Should there be this roadmap? Is the absence of it that accounts for the lack
of clear achievements? Or, is it rather the problem of the vehicle and not the lack of the
roadmap? Perhaps, it is both.
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Let us briefly look at each component of the APEC agenda. APEC’s liberalization agenda
is defined by the Bogor Goals and is implemented through the OAA’s IAPs and CAPs.
The problem here is lack of specificity of what constitute the Bogor Goals: will all
barriers to trade and investment have to be (fully) eliminated by the end date? Can there
be exclusions of so-called sensitive sectors, and how will they be determined? What
discipline will be applied to the exclusion list? Should they be progressively reduced as in
the case of the ASEAN Free Trade Area (AFTA)? APEC governments have continuously
postponed addressing these questions. Without having a clear idea of what the Bogor
Goals entail, it will be difficult to define the roadmap to achieving them. And yet, there is
now widespread feeling that by 2010 APEC developed members will not be able to
deliver on the Bogor Goals. Is this because of APEC’s modality of “concerted unilateral
liberalization”?
Can APEC’s peer review process be strengthened so that APEC
members will produce stronger and bolder IAPs? Or should APEC be transformed from
being a voluntary process (V-APEC) to becoming more binding (B-APEC)? The APEC
Business Advisory Council (ABAC) recently calls on APEC governments to move
towards a B-APEC. However, the more feasible option for APEC is to strengthen the
mechanisms of a V-APEC (Soesastro, 2005).
In the areas of facilitation, APEC has undertaken many activities that are useful to
promoting trade and investment. However, there are no mechanisms in APEC to ensure
that members will implement agreements, improved practices or policy changes. Without
such mechanism, it is unlikely that there can be a roadmap for APEC.
APEC’s ECOTECH agenda has suffered from serious problems from the outset. There
has been a lack of clear articulation by APEC members about its significance and the
development of a meaningful approach to promote it. It has been a collection of disparate
initiatives and projects. Suggestions for introducing an overarching framework (e.g., Elek
and Soesastro, 2000) have met with limited success as governments continue with the
way they design and implement economic and technical cooperation initiatives and
programs.
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And finally, EHS is an equally difficult proposition. Certain quarters in society view
APEC itself as a manifestation of the threat to human security, especially for the weak
and the marginalized groups in society. APEC governments have clearly identified the
critical role of governance in overcoming this problem, but it remains to be seen how
they can translate their initiatives in this area into concrete cooperation programs.
In addition to examining the issue of APEC’s roadmap, perhaps attention should also be
given to fixing the vehicle in which the Asia Pacific region will venture.
References
Elek, Andrew and Hadi Soesastro (2000), “Ecotech at the heart of APEC: capacitybuilding in the Asia Pacific,” in Ippei Yamazawa (ed.), Asia Pacific Economic
Cooperation (APEC) -- Challenges and tasks for the twenty-first century (London:
Routledge), pp.218-254.
Soesastro, Hadi (2005), “Re-writing APEC’s Approach?” in Mark Borthwick et al, The Future of
APEC and Regionalism in Asia Pacific (Jakarta: Centre for Strategic and International Studies,
and PECC), pp. 1-8.
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